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Press release from PR Newswire

Domtar Corporation reports preliminary second quarter 2012 financial results

Friday, July 27, 2012

Domtar Corporation reports preliminary second quarter 2012 financial results07:30 EDT Friday, July 27, 2012 Good financial results despite the impact of lack-of-order downtime in paper (All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.) Second quarter 2012 net earnings of $1.61 per share, earnings before items1 of $1.61 per share Year-to-date shipments of specialty and packaging paper increased 12% compared to 2011 Share buybacks totaled $69 million in the second quarter of 2012 TICKER SYMBOL (NYSE: UFS) (TSX: UFS) MONTREAL, July 27, 2012 /PRNewswire/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $59 million ($1.61 per share) for the second quarter of 2012 compared to net earnings of $28 million ($0.76 per share) for the first quarter of 2012 and net earnings of $54 million ($1.30 per share) for the second quarter of 2011. Sales for the second quarter of 2012 amounted to $1.4 billion. Excluding items listed below, the Company had earnings before items1 of $59 million ($1.61 per share) for the second quarter of 2012 compared to earnings before items1 of $61 million ($1.65 per share) for the first quarter of 2012 and earnings before items1 of $98 million ($2.37 per share) for the second quarter of 2011. Second quarter 2012 items: None. First quarter 2012 items: Premium paid and costs related to the debt repurchase of $50 million ($30 million after tax); Closure and restructuring costs, including write-down of property, plant and equipment, of $3 million ($2 million after tax); and Negative impact of purchase accounting of $1 million ($1 million after tax). Second quarter 2011 items: Charge of $62 million ($38 million after tax) related to the impairment and write-down of property, plant and equipment; Net losses on the sale of property, plant and equipment and business of $6 million ($5 million after tax); and Closure and restructuring costs of $2 million ($1 million after tax). "We had a good operating performance in the quarter despite costs associated with lack-of-order downtime," said John D. Williams, President and CEO. "So far this year, our shipments have declined due to softness in market demand for paper but our average pricing and margins are holding up well. The ramp-up of the Appleton paper supply agreement and the conversion of the Marlboro, South Carolina mill to lightweight specialty and packaging grades will remove high volume paper capacity and help reduce the amount of potential downtime for the back half of 2012." Commenting on the Personal Care segment, Mr. Williams added, "Our Personal Care business continues its growth, reaching annualized sales of over $425 million in the second quarter. The addition of EAM Corporation will provide a long term research capability to help further differentiate our offering and grow the business." QUARTERLY REVIEW Operating income before items1 was $106 million in the second quarter of 2012 compared to an operating income before items1 of $113 million in the first quarter of 2012. Depreciation and amortization totaled $96 million in the second quarter of 2012. (In millions of dollars)   2Q 2012   1Q 2012 Sales   $1,368   $1,398 Operating income (loss)           Pulp and Paper segment   96   107   Distribution segment   (2)   (1)   Personal Care segment   12   8   Corporate   -   (5)   Total   106   109 Operating income before items1   106   113 Depreciation and amortization   96   97 The decrease in operating income before items1 in the second quarter of 2012 was the result of lower shipments for papers and pulp and higher costs for both planned maintenance and for lack-of-order downtime in papers. These factors were partially offset by higher selling prices for paper and pulp, lower SG&A costs and the inclusion of Attends Europe for a full quarter. When compared to the first quarter of 2012, paper shipments decreased 5.9% and pulp shipments decreased 5.4%. Paper deliveries of Ariva® decreased 9% when compared to the first quarter of 2012. The shipments-to-production ratio for paper was 98% in the second quarter of 2012, compared to 100% in the first quarter of 2012. Lack-of-order downtime and machine slowdowns in papers totaled 23,000 tons. Paper inventories increased by 13,000 tons while pulp inventories increased by 15,000 metric tons as at the end of June, compared to March levels. LIQUIDITY AND CAPITAL Cash flow provided from operating activities amounted to $175 million and capital expenditures amounted to $76 million, resulting in free cash flow1 of $99 million for the three months ended June of 2012. Domtar's net debt-to-total capitalization ratio1 stood at 19% at June 30, 2012 compared to 12% at December 31, 2011. OUTLOOK Paper shipments are expected to continue to decline with market demand and due to a shift to lower basis weight papers from the conversion of Communication paper to Specialty and packaging paper grades. Pulp markets are expected to remain challenging. We anticipate cost inflation to be moderate for the balance of the year. EARNINGS CONFERENCE CALL The Company will hold a conference call today at 11:00 a.m. (ET) to discuss its second quarter 2012 financial results. Financial analysts are invited to participate in the call by dialing at least 10 minutes before start time 1 (866) 321-8231 (toll free - North America) or 1 (416) 642-5213 (International), while media and other interested individuals are invited to listen to the live webcast on the Domtar Corporation website at www.domtar.com. The Company will release its third quarter 2012 earnings on October 26, 2012 before markets open, followed by a conference call at 11:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date. About Domtar Domtar Corporation (NYSE: UFS) (TSX: UFS) designs, manufactures, markets and distributes a wide variety of fiber-based products including communication papers, specialty and packaging papers and adult incontinence products. The foundation of its business is a network of world class wood fiber converting assets that produce papergrade, fluff and specialty pulps. The majority of its pulp production is consumed internally to manufacture paper and consumer products. Domtar is the largest integrated marketer of uncoated freesheet paper in North America with recognized brands such as Cougar®, Lynx® Opaque Ultra, Husky® Opaque Offset, First Choice® and Domtar EarthChoice®. Domtar is also a leading marketer and producer of a complete line of incontinence care products marketed primarily under the Attends® brand name. Domtar owns and operates Ariva®, an extensive network of strategically located paper and printing supplies distribution facilities. In 2011, Domtar had sales of US$5.6 billion from nearly 50 countries. The Company employs approximately 9,500 people. To learn more, visit www.domtar.com. Forward-Looking Statements All statements in this news release that are not based on historical fact are "forward-looking statements." While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the captions "Forward-Looking Statements" and "Risk Factors" of the latest Form 10-K filed with the SEC as periodically updated by subsequently filed Form 10-Q's. Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances.       1  Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix. Domtar Corporation Highlights (In millions of dollars, unless otherwise noted)                     Three months ended June 30 Three months ended June 30 Six months ended June 30 Six months ended June 30       2012 2011 2012 2011       (Unaudited)       $ $ $ $               Selected Segment Information                       Sales             Pulp and Paper 1,132 1,261   2,323   2,530     Distribution 172 190   361   407     Personal Care 107 -   177 - Total for reportable segments 1,411 1,451   2,861   2,937     Intersegment sales - Pulp and Paper (43) (48) (95) (111) Consolidated sales   1,368 1,403   2,766   2,826 Depreciation and amortization and impairment and write-down of property, plant and equipment               Pulp and Paper   88    94   181   186     Distribution   2    1   3   2     Personal Care   6 -   9 - Total for reportable segments   96    95   193   188     Impairment and write-down of property, plant and equipment - Pulp and Paper -    62   2   65 Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment 96    157 195   253               Operating income (loss)             Pulp and Paper 96 91 203 300     Distribution (2) (2) (3) 1     Personal Care 12 - 20 -     Corporate - 6 (5) 5 Consolidated operating income 106 95 215 306 Interest expense, net 18 21 89 42 Earnings before income taxes and equity earnings 88 74 126 264 Income tax expense 27 20 35 77 Equity loss, net of taxes 2 - 4 - Net earnings 59 54 87 187               Per common share (in dollars)           Net earnings             Basic 1.62 1.31 2.38 4.50     Diluted 1.61 1.30 2.36 4.46 Weighted average number of common and exchangeable shares outstanding (millions)             Basic 36.4 41.1 36.6 41.6     Diluted 36.6 41.4 36.8 41.9               Cash flows provided from operating activities 175 306 205 454 Additions to property, plant and equipment 76 20 105 33 Domtar Corporation Consolidated Statements of Earnings (In millions of dollars, unless otherwise noted)                 Three months ended June 30 Three months ended June 30 Six months ended June 30 Six months ended June 30     2012 2011 2012 2011     (Unaudited)     $ $ $ $             Sales 1,368 1,403 2,766 2,826 Operating expenses           Cost of sales, excluding depreciation and amortization 1,075 1,056 2,163 2,077   Depreciation and amortization 96 95 193 188   Selling, general and administrative 89 88 188 178   Impairment and write-down of property, plant and equipment - 62 2 65   Closure and restructuring costs - 2 1 13   Other operating loss (income), net 2 5 4 (1)   1,262 1,308 2,551 2,520 Operating income 106 95 215 306 Interest expense, net 18 21 89 42 Earnings before income taxes and equity earnings 88 74 126 264 Income tax expense 27 20 35 77 Equity loss, net of taxes 2 - 4 - Net earnings 59 54 87 187           Per common share (in dollars)           Net earnings             Basic 1.62 1.31 2.38 4.50     Diluted 1.61 1.30 2.36 4.46   Weighted average number of common and exchangeable shares outstanding (millions)             Basic 36.4 41.1 36.6 41.6     Diluted 36.6 41.4 36.8 41.9 Domtar Corporation Consolidated Balance Sheets at (In millions of dollars)             June 30 December 31     2012 2011     (Unaudited)     $ $   Assets         Current assets         Cash and cash equivalents 276 444   Receivables, less allowances of $5 and $5 642 644   Inventories 673 652   Prepaid expenses 39 22   Income and other taxes receivable 51 47   Deferred income taxes 128 125     Total current assets 1,809 1,934           Property, plant and equipment, at cost   8,624 8,448   Accumulated depreciation   (5,174) (4,989)     Net property, plant and equipment 3,450 3,459 Goodwill   260 163 Intangible assets, net of amortization   346 204 Other assets   108 109       Total assets 5,973 5,869               Liabilities and shareholders' equity       Current liabilities         Bank indebtedness 22 7   Trade and other payables 639 688   Income and other taxes payable 23 17   Long-term debt due within one year 6 4     Total current liabilities 690 716   Long-term debt   950 837 Deferred income taxes and other   990 927 Other liabilities and deferred credits   395 417   Shareholders' equity         Exchangeable shares 49 49   Additional paid-in capital 2,254 2,326   Retained earnings 729 671   Accumulated other comprehensive loss (84) (74)     Total shareholders' equity 2,948 2,972       Total liabilities and shareholders' equity 5,973 5,869 Domtar Corporation Consolidated Statements of Cash Flows (In millions of dollars)         Six months ended June 30 Six months ended June 30   2012 2011   (Unaudited)       $ $       Operating activities     Net earnings 87 187 Adjustments to reconcile net earnings to cash flows from operating activities       Depreciation and amortization 193 188   Deferred income taxes and tax uncertainties 8 30   Impairment and write-down of property, plant and equipment 2 65   Net gains on disposals of property, plant and equipment and sale of business - (1)   Stock-based compensation expense 2 2   Equity loss, net 4 -   Other (4) 1 Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses       Receivables 26 (61)   Inventories 3   34   Prepaid expenses (12) (13)   Trade and other payables (120) (31)   Income and other taxes  - 22   Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense 5 12   Other assets and other liabilities 11 19   Cash flows provided from operating activities 205 454   Investing activities         Additions to property, plant and equipment (105) (33) Proceeds from disposals of property, plant and equipment - 28 Proceeds from sale of business - 10 Acquisition of businesses, net of cash acquired (293) - Other (4) -   Cash flows (used for) provided from investing activities (402) 5   Financing activities     Dividend payments (26) (21) Net change in bank indebtedness 15 2 Issuance of long-term debt 300 - Repayment of long-term debt (188) (1) Debt issue costs - (3) Stock repurchase (73) (234) Other 1 9   Cash flows provided from (used for) financing activities 29 (248)   Net (decrease) increase in cash and cash equivalents (168) 211 Translation adjustments related to cash and cash equivalents - 1 Cash and cash equivalents at beginning of period 444 530 Cash and cash equivalents at end of period 276 742       Supplemental cash flow information       Net cash payments for:         Interest (including $47 million of tender offer premiums in 2012) 82 37     Income taxes paid 49 25   Domtar Corporation Quarterly Reconciliation of Non-GAAP Financial Measures (In millions of dollars, unless otherwise noted) The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP") financial metrics identified in bold as "Earnings before items", "Earnings before items per diluted share", "EBITDA", "EBITDA margin", "EBITDA before items", "EBITDA margin before items", "Free cash flow", "Net debt" and "Net debt-to-total capitalization." Management believes that the financial metrics presented are frequently used by investors and are useful to evaluate our ability to service debt and our overall credit profile. Management believes these metrics are also useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results. The Company calculates "Earnings before items" and "EBITDA before items" by excluding the after-tax (pre-tax) effect of items considered by management as not reflecting our current operations. Management uses these measures, as well as EBITDA and Free cash flow, to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Net earnings provides for a more complete analysis of the results of operations. Net earnings and Cash flow provided from operating activities are the most directly comparable GAAP measures.             2012   2011     Q1 Q2 YTD   Q1 Q2 Q3 Q4 YTD Reconciliation of "Earnings before items" to Net earnings                         Net earnings ($) 28 59 87   133 54 117 61 365   (+) Impairment and write-down of property, plant and equipment ($) 1 - 1   2 38 4 9 53   (+) Closure and restructuring costs ($) 1 - 1   8 1 1 23 33   (-) Net losses (gains) on disposals of property, plant and equipment and sale of business ($) - - -    (5) 5 (3) - (3)   (+) Impact of purchase accounting ($) 1 - 1   - - 1 - 1   (+) Loss on repurchase of long-term debt ($) 30 - 30   - - 3 - 3   (=) Earnings before items ($) 61 59 120   138 98 123 93 452   ( / ) Weighted avg. number of common and exchangeable shares outstanding (diluted) (millions) 37.0 36.6 36.8   42.4 41.4 39.7 37.4 40.2   (=) Earnings before items per diluted share ($) 1.65 1.61 3.26   3.25 2.37 3.10 2.49 11.24                       Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings                         Net earnings ($) 28 59 87   133 54 117 61 365   (+) Equity loss, net of taxes ($) 2 2 4   - - - 7 7   (+) Income tax expense ($) 8 27 35   57 20 45 11 133   (+) Interest expense, net ($) 71 18 89   21 21 25 20 87   (=) Operating income ($) 109 106 215   211 95 187 99 592   (+) Depreciation and amortization ($) 97 96 193   93 95 93 95 376   (+) Impairment and write-down of property, plant and equipment ($) 2 - 2   3 62 8 12 85   (-) Net losses (gains) on disposals of property, plant and equipment and sale of business ($) - - -   (7) 6 (4) (1) (6)   (=) EBITDA ($) 208 202 410   300 258 284 205 1,047   (/) Sales ($) 1,398 1,368 2,766   1,423 1,403 1,417 1,369 5,612   (=) EBITDA margin (%) 15% 15% 15%   21% 18% 20% 15% 19%     EBITDA ($) 208 202 410   300 258 284 205 1,047   (+) Closure and restructuring costs ($) 1 - 1   11 2 1 38 52   (+) Impact of purchase accounting ($) 1 - 1   - - 1 - 1   (=) EBITDA before items ($) 210 202 412   311 260 286 243 1,100   (/) Sales ($) 1,398 1,368 2,766   1,423 1,403 1,417 1,369 5,612   (=) EBITDA margin before items (%) 15% 15% 15%   22% 19% 20% 18% 20%                       Reconciliation of "Free cash flow" to Cash flow provided from operating activities                         Cash flow provided from operating activities ($) 30 175 205   148 306 257 172 883   (-) Additions to property, plant and equipment ($) (29) (76) (105)   (13) (20) (31) (80) (144)   (=) Free cash flow ($) 1 99 100   135 286 226 92 739                       "Net debt-to-total capitalization" computation                         Bank indebtedness ($) 13 22     25 25 17 7     (+) Long-term debt due within one year ($) 6 6     2 2 5 4     (+) Long-term debt ($) 952 950     825 824 837 837     (=) Debt ($) 971 978     852 851 859 848     (-) Cash and cash equivalents ($) (315) (276)     (604) (742) (461) (444)     (=) Net debt ($) 656 702     248 109 398 404     (+) Shareholders' equity ($) 3,009 2,948     3,288 3,194 2,999 2,972     (=) Total capitalization ($) 3,665 3,650     3,536 3,303 3,397 3,376       Net debt ($) 656 702     248 109 398 404     (/) Total capitalization ($) 3,665 3,650     3,536 3,303 3,397 3,376     (=) Net debt-to-total capitalization (%) 18% 19%     7% 3% 12% 12%   "Earnings before items", "Earnings before items per diluted share", "EBITDA", "EBITDA margin", "EBITDA before items", "EBITDA margin before items", "Free cash flow", "Net debt" and "Net debt-to-total capitalization" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Net earnings, Operating income or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies. Domtar Corporation Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2012 (In millions of dollars, unless otherwise noted) The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP"), financial metrics identified in bold as "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results. The Company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.                                                                   Pulp and Paper Distribution Personal Care (1) Corporate Total         Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                                           Operating income (loss) ($) 107 96 - - 203 (1) (2) - - (3) 8 12 - - 20 (5) - - - (5) 109 106 - - 215   (+) Impairment and write-down of property, plant and equipment ($) 2 - - - 2 - - - - - - - - - - - - - - - 2 - - - 2   (+) Closure and restructuring costs ($) 1 - - - 1 - - - - - - - - - - - - - - - 1 - - - 1   (+) Impact of purchase accounting ($) - - - - - - - - - - 1 - - - 1 - - - - - 1 - - - 1                                                             (=) Operating income (loss) before items ($) 110 96 - - 206 (1) (2) - -  (3) 9 12 - - 21 (5) - - -  (5) 113 106 - - 219                                                           Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                                             Operating income (loss) before items ($) 110 96 - - 206 (1) (2) - - (3) 9 12 - - 21 (5) - - -  (5) 113 106 - - 219   (+) Depreciation and amortization ($) 93 88 - - 181 1 2 - - 3 3 6 - - 9 - - - -  - 97 96 - - 193                                                             (=) EBITDA before items ($) 203 184 - - 387 - - - - - 12 18 - - 30 (5) - - -  (5) 210 202 - - 412   (/) Sales ($) 1,191 1,132 - - 2,323 189 172 - - 361 70 107 - - 177 -  - - -  - 1,450 1,411 - - 2,861   (=) EBITDA margin before items (%) 17% 16% - - 17% - - - - - 17% 17% - - 17% - - - -  - 14% 14% - - 14% "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies. (1) On March 1, 2012, the Company acquired 100% of the shares of Attends Healthcare Limited.  On May 1, 2012, the Company acquired 100% of the shares of EAM Corporation.  Domtar Corporation Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2011 (In millions of dollars, unless otherwise noted) The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP"), financial metrics identified in bold as "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results. The Company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.                                                                   Pulp and Paper Distribution Personal Care (1) Corporate Total         Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                                           Operating income (loss) ($) 209 91 189 92 581 3 (2) (1) - - - - - 7 7 (1) 6 (1) - 4 211 95 187 99 592   (+) Impairment and write-down of property, plant and equipment ($) 3 62 8 12 85 - - - - - - - - - - - - - - - 3 62 8 12 85   (+) Closure and restructuring costs ($) 11 2 1 37 51 - - - 1 1 - - - - - - - - - - 11 2 1 38 52   (-) Net losses (gains) on disposals of property, plant and equipment and sale of business ($) (4) 12 (4) (1) 3 (3) - - - (3) - - - - - - (6) - - (6) (7) 6 (4) (1) (6)   (+) Impact of purchase accounting ($) - - - - - - - - - - - - 1 - 1 - - - - - - - 1 - 1                                                             (=) Operating income (loss) before items ($) 219 167 194 140 720 - (2) (1) 1 (2) - - 1 7 8 (1) - (1) - (2) 218 165 193 148 724                                                           Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                                         Operating income (loss) before items ($) 219 167 194 140 720 - (2) (1) 1 (2) - - 1 7 8 (1) - (1) - (2) 218 165 193 148 724   (+) Depreciation and amortization ($) 92 94 91 91 368 1 1 1 1 4 - - 1 3 4 - - - - - 93 95 93 95 376                                                             (=) EBITDA before items ($) 311 261 285 231 1,088 1 (1) - 2 2 - - 2 10 12 (1) - (1) - (2) 311 260 286 243 1,100   (/) Sales ($) 1,269 1,261 1,246 1,177 4,953 217 190 197 177 781 - - 17 54 71 - - - - - 1,486 1,451 1,460 1,408 5,805   (=) EBITDA margin before items (%) 25% 21% 23% 20% 22% - - - 1% - - - 12% 19% 17% - - - - - 21% 18% 20% 17% 19% "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies. (1) On September 1, 2011, the Company acquired 100% of the shares of Attends Healthcare Inc.  Domtar Corporation Supplemental Segmented Information (In millions of dollars, unless otherwise noted)                                           2012   2011             Q1 Q2 YTD   Q1 Q2 Q3 Q4 YTD Pulp and Paper Segment                       Sales ($) 1,191 1,132 2,323   1,269 1,261 1,246 1,177 4,953     Intersegment sales - Pulp and Paper ($) (52) (43) (95)   (63) (48) (43) (39) (193)   Operating income ($) 107 96 203   209 91 189 92 581   Depreciation and amortization ($) 93 88 181   92 94 91 91 368   Impairment and write-down of property, plant and equipment ($) 2 - 2   3 62 8 12 85                               Papers                       Papers Production ('000 ST) 870 832 1,702   899 890 875 871 3,535   Papers Shipments ('000 ST) 870 819 1,689   913 901 889 831 3,534       Communication Papers ('000 ST) 756 705 1,461   816 794 784 729 3,123       Specialty and Packaging ('000 ST) 114 114 228   97 107 105 102 411                               Pulp                       Pulp Shipments(a) ('000 ADMT) 389 368 757   375 361 358 403 1,497       Hardwood Kraft Pulp (%) 15% 16% 19%   20% 19% 18% 19% 19%       Softwood Kraft Pulp (%) 61% 57% 57%   55% 54% 57% 58% 57%       Fluff Pulp (%) 24% 27% 24%   25% 27% 25% 23% 24%                             Distribution Segment                       Sales ($) 189 172 361   217 190 197 177 781   Operating income (loss) ($) (1) (2) (3)   3 (2) (1) - -   Depreciation and amortization ($) 1 2 3   1 1 1 1 4                             Personal Care Segment                       Sales ($) 70 107 177   - - 17 54 71   Operating income ($) 8 12 20   - - - 7 7   Depreciation and amortization ($) 3 6 9   - - 1 3 4                                                 Average Exchange Rates $US / $CAN 1.001 1.010 1.006   0.986 0.968 0.980 1.023 0.989         $CAN / $US 0.999 0.990 0.994   1.014 1.034 1.021 0.977 1.011         ?EUR / $US 1.312 1.283 1.297   - - - - - (a) Figures are gross of market pulp purchased from other producers on the open market for some of our paper making operations. Pulp Shipments represent the amount of pulp produced in excess of our internal requirement.       Note: the term "ST" refers to a short ton and the term "ADMT" refers to an air dry metric ton.   SOURCE DOMTAR CORPORATIONFor further information: <p> <b>MEDIA AND INVESTOR RELATIONS</b><br font-weight="bold"></br> Pascal Bossé<br/> Vice-President<br/> Corporate Communications and Investor Relations<br/> Tel.: 514-848-5938<br/> </p>